Rhabdomyosarcoma, a malignant tumor of skeletal muscle, is the most common soft tissue sarcoma of childhood. Approximately 35% of cases have an alveolar histiotype and a (2;13) translocation, which tends to be associated with a more aggressive clinical course. This rearrangement creates a fusion protein involving the developmentally regulated PAX3 transcription factor and a ubiquitously expressed member of the forkhead family of transcription factors, designated FKHR. Preliminary studies have shown that PAX3/FKHR can function both as a transcriptional activator and a potent inhibitor of myogenesis, relying on DNA-binding domains from PAX3 and the novel FKHR activation domain. Cellular transformation by the chimera depends absolutely on the presence of FKHR structural motifs, whereas DNA binding through the PAX3 paired domain appears dispensable, indicating that oncogenesis may not proceed through activation of PAX3 target genes. To precisely understand how the fusion protein contributes to neoplastic transformation of myogenic cells, we propose to define the contribution of each of its distinct domains to the modulation of gene expression. First, the structural components of PAX3/FKHR essential for in vitro cellular transformation will be identified and then tested for their capacity to induce tumors in vivo by targeting their expression to the myogenic precursors of transgenic mice. Second, interacting proteins that associate with these functionally important PAX3/FKHR domains will be evaluated for their capacity to influence the in vitro transforming potential of the fusion protein. A final goal will be to delineate the biologic pathways regulated by PAX3/FKHR through identification of genes that are specifically modulated by enforced expression of the fusion protein and are essential for tumorigenesis. Results of these studies should fill in the entire pathway from t(2;13)-mediated creation of the PAX3/FKHR oncoprotein to its aberrant activation of downstream targets and modulation of biologic pathways, culminating in overt tumor development. Improved understanding of the mechanisms responsible for cellular transformation by PAX3/FKHR will yield important information about the regulatory circuits disrupted by its expression in myogenic cells and may suggest novel approaches for the treatment of this often resistant tumor.